AGREEMENT


                        FOR EXPLORATION, DEVELOPMENT AND
                                   PRODUCTION
                          OF OIL IN KARAKUDUK OIL FIELD
                               IN MANGISTAU OBLAST
                          OF THE REPUBLIC OF KAZAKHSTAN


                                     BETWEEN


                       MINISTRY OF OIL AND GAS INDUSTRIES
                          OF THE REPUBLIC OF KAZAKHSTAN
                              FOR AND ON BEHALF OF
                        THE GOVERNMENT OF THE REPUBLIC OF
                                   KAZAKHSTAN

                                       AND

                       JOINT STOCK COMPANY OF CLOSED TYPE
                          KARAKUDUK MUNAY JOINT VENTURE


                                  ALMATY - 1995


<PAGE>
<TABLE>
<CAPTION>

                                    CONTENTS

<S>                                                                                                          <C>
SUBJECT OF THE AGREEMENT......................................................................................1
SECTION 1.  Definitions.......................................................................................2
SECTION 2.  Ownership Rights..................................................................................6
SECTION 3.  Duration of the Agreement and Termination.........................................................7
                           3.1.  Duration.....................................................................7
                           3.2.  Exploration Phase............................................................7
                           3.3.  Development and Production Phase.............................................8
                           3.4.  Termination..................................................................8
SECTION 4.  Principle Rights and Obligations of the
                      Contractor and Investor.................................................................9
                           4.1.  Rights of the Contractor and Investor........................................9
                           4.2.  Obligations of the Contractor...............................................12
SECTION 5.  Assistance and the Support of the
                      Authorized Body........................................................................14
SECTION 6.  Board of Directors...............................................................................15
SECTION 7.  Operational and Financial Requirements
                      and Budget.............................................................................15
                           7.1.  Exploration.................................................................15
                           7.2.  Development and Production..................................................16
                           7.3.  Procedural and Approval Method of the
                                       Operational Documents.................................................17
SECTION 8.  Expenditures and Compensation....................................................................19
SECTION 9.  Commercial and Financial Terms and Conditions....................................................19
                           9.1.  Financial Matters...........................................................19
                           9.2.  Customs.....................................................................20
                           9.3.  Taxes and Payments..........................................................20
                           9.4.  Compensation................................................................26
                           9.5.  Accounting Procedures and Auditing..........................................26
SECTION 10.  Protection of Subsurface Resources, Natural
                      Environment and Labor and Population Safety............................................27
SECTION 11.  Other Legal Issues..............................................................................28
                           11.1.  Transfer and Assignment of Rights..........................................28
                           11.2.  Payments Related with Field Allocation
                                        and Usage Right......................................................28
                           11.3.  Insurance..................................................................28
                           11.4.  Legal Adjustments in Relation with
                                        Working Conditions...................................................29
                           11.5.  Force Majeure..............................................................29
                           11.6.  Local Consumption..........................................................29
                           11.7.  Amendments to the Terms and Conditions
                                        of the Agreement.....................................................30
                           11.8.  Confidentiality............................................................30
                           11.9.  Settlement of Disputes.....................................................31
                           11.10.  Waiver....................................................................31
                           11.11.  Correspondence............................................................32
                           11.12.  Headings..................................................................32

</TABLE>

<PAGE>


                              SUBJECT OF AGREEMENT


This agreement  (hereinafter  referred to as "Agreement") is prepared and signed
on "30" August 1995 by and between the  Ministry of Oil and Gas  Industry of the
Republic of Kazakhstan,  (hereinafter  referred to as "Authorized  Body") acting
for and on behalf of and  representing  the Government of Republic of Kazakhstan
in accordance with the legislation of the Republic of Kazakhstan and Joint Stock
Company of closed type  "Karakuduk-Munay  Inc." Joint Venture,  established  and
operating  in  accordance  with and  under  the  existing  Laws of  Republic  of
Kazakhstan,  (hereinafter referred to as "Contractor"); and having the following
shareholders:  PGO  "Mangistauneftegazgeologiya"  with its new name GHK Zharkyn,
"Kazakhstanmunaygaz"  National  Petroleum Company with its new name GHK Munaygaz
and  "Korporatsiya   KRAMDS-Mangistau"  Inc.  which  is  owned  by  Korporatsiya
Mangistau  Terra  International,   by  assignment  of  shares,  established  and
operating under the laws of the Republic of Kazakhstan, hereinafter collectively
referred to as  "Shareholders  of Kazakhstan  Side" and Central Asian  Petroleum
(Guernsey)  Limited,  established  and  operating  under  the laws of  Island of
Guernsey,  (hereinafter referred to as "Investor").  The Authorized Body and the
Contractor are sometimes referred to individually as "Party" and collectively as
"Parties" hereinafter in this Agreement.

WHEREAS;  as a result of the  transfer  of some of the  rights and shares of the
Contractor to the Investor in accordance with the Clauses 4.1.9. and 11.1.1, the
parties to that certain  agreement dated 1st of July 1993 between the Authorized
Body and the Contractor,  signed in accordance with the Decree of the Cabinet of
Ministers of the Republic of  Kazakhstan  No: 498 dated June 11, 1993.  Thus, by
execution of this Agreement, the 1st of July 1993 dated agreement, as amended by
this Agreement,  is superseded by this Agreement and now this Agreement shall be
in full force and valid.

WHEREAS; the Contractor has been formed with the re-registration of the Articles
of Association of joint stock company of closed type  Karakuduk-Munay Inc. Joint
Venture (hereinafter referred to as the "Articles");  by the Registrar Office of
Economical  Corporations,  Incorporated  Partnerships and Companies of Financial
Directorate  of Mangistau  Province  No.  23625 dated March 1, 1995;  and by the
National Agency of Foreign Investments No. 2262 dated April 27, 1995.

WHEREAS; the usage right of the Subsurface Resources of the Field of 68.4 sq.km.
in the  Town  of  Mangistau  of  Mangistau  Region  of  which  the  Geographical
Coordinates  are given herein below in drawing number  L-39-xx,  and whereas the
Observation Map is provided as Enclosure-I to this Agreement;  has been given to
joint stock Company of closed type  Karakuduk-Munay  Inc. Joint  Venture,  for a
period  of  30  (thirty)  years,  for  exploration,   development,   production,
treatment,  storage,  refining,  transporting  and  sales  including  export  of
hydrocarbons from Karakuduk oil field;




<PAGE>

44o51'43"  North  Parallel  53o52'30"  East Meridian  44o52'20"  North  Parallel
53o54'08"  East  Meridian  44o52'10"  North  Parallel  53o59'10"  East  Meridian
44o49'10"  North  Parallel  54o02'50"  East Meridian  44o48'13"  North  Parallel
53o57'10" East Meridian 44o49'40" North Parallel 53o53'17" East Meridian

WHEREAS; the Contractor shall have the obligation to conduct the Work Program in
accordance  with the terms  and  conditions  of this  Agreement  by taking  into
consideration  the License for the Right to Use  Natural  Deposits  (hereinafter
referred to as "License")  issued by the Government of Republic of Kazakhstan on
June 28, 1995 with the serial number MG No:249 Oil.

                                    SECTION-1

                                   DEFINITIONS

Unless otherwise  specifically referred to in this Agreement,  any singular word
may define the plural and any plural word may define the singular.

1.1.  "Agreement" means this Agreement signed by and between the Ministry of Oil
and Gas Industry of the Republic of Kazakhstan and joint stock company of closed
type  Karakuduk-Munay Inc. Joint Venture for the implementation of the Petroleum
Activities.

1.2.  "Petroleum  Activities"  means as  foreseen in the  Agreement;  geological
research,  development,  production,  treatment and purification  (treatment and
drying  process  for  the  natural  gas and the  separation  of it in  different
elements  from  petroleum),   refining,  storage,  pipeline  transportation  and
marketing  and  sales  activities  in local  and  international  markets  of the
hydrocarbons and any other preparation and sub-activities associated with.

1.3.  "Expenditures  for  Petroleum  Activities"  means  all  types of costs and
expenditures  incurred  by  the  Contractor  for  the  Petroleum  Activities  in
accordance  with  the  Agreement  i.e.   (expenditures  related  with  well  and
equipment,  maintenance,  construction,  subsurface and earth studies,  repairs,
chemicals, oils and lubricants,  spare parts, labor force, required services for
operations, catering and accommodation, management and administration, personnel
training and the preparation and issue of project-budget documentation and other
related documentation as well as removing the remaining).

1.4.  "Authorized  Body"  means  the  Ministry  of Oil and Gas  Industry  of the
Republic of Kazakhstan  who is acting for and on behalf of the Government of the
Republic of Kazakhstan and legally empowered to conduct Petroleum Activities.


                                        2

<PAGE>


1.5.  "Contractor" means joint stock company of closed type Karakuduk-Munay Inc.
Joint  Venture  whose  Shareholders  are; GHK Zharkyn with 20% (twenty  percent)
share,  GHK Munaygaz with 20% (twenty  percent)  share,  Korporatsiya  Mangistau
Terra International with 10% (ten percent) share and the Investor, Central Asian
Petroleum (Guernsey) Limited with 50% (fifty percent) share.

1.6.  "Sub-Contractor"  means any private and/or juridical person who is used by
the  Contractor for the supply of required  equipment,  material and services in
the required and demanded  quality in order to fulfill the  requirements  of the
Agreement.

1.7.  "Agreement  Field"  means  Karakuduk  Oil Field  allocated  for  Petroleum
Activities, as defined in the Subject of the Agreement Section of this Agreement
and as shown in geographic coordinates in Enclosure-I.  During the course of the
Petroleum  Activities,  in case the geographic settlement borders of the Oil and
Gas fields are determined to be extended the borders of the field defined in the
Subject of the Agreement Section of this Agreement and in Enclosure-I;  issue of
expanding the "Agreement  Field" shall be resolved by the Parties through mutual
negotiations.

1.8. "Commercial  Disclosure" or "Commercial  Exploration" means the exploration
of the  Hydrocarbon  reserves in the Agreement Field of which their operation is
found economical and where the income to be obtained from their production shall
meet with the  operation  and  production  expenditures  and shall  generate the
profit to be found  appropriate  and reasonable by the Parties.  In such a case,
the field is considered productive for the purpose of operation.

1.9. "Field" means one or more natural  accumulation of Hydrocarbons,  which are
deposited  in the  Agreement  Field one over the other  either in  connected  or
isolated levels or reservoirs,  within one or several interconnected  geological
traps in  vertical  form and  considered  as the  whole for the  purpose  of the
operations.

1.10.  "Hydrocarbons"  means Crude Oil,  Condensate,  Natural  Gas,  natural gas
liquids and any other  associated  substances  found  during the  production  of
those.  Natural  gas  liquid  is the  Hydrocarbons  where  the  Natural  Gas and
Associated  Gas is turning  into liquid in a different  environment  than normal
conditions.

1.11.  "Petroleum" or "Crude Oil" means; asphalt bithium and liquid Hydrocarbons
that are also known as "Distillate" or "Condensate"  and obtained from the wells
in the form of liquid  under normal heat and pressure  without  being  dependent
upon their density by densing Natural Gas that can also easily be steamed.

1.12. "Gas" or "Natural Gas" means the gas which is not Hydrocarbon but obtained
from the wells with the  Hydrocarbons  in the form of gas liquid and Gas remains
after densing  different type of  Hydrocarbons  and elements,  sulfur,  carbonic
acid, helium  (excluding  densed gasses that can become liquid),  greasy mineral
gas, dry mineral gas,  Associated  Gas and  Hydrocarbons,  under normal heat and
pressure.

                                        3

<PAGE>


1.13.  "Associated  Gas" means the gas comes out during  the  production  of the
Petroleum which is mixed with Crude Oil or accumulated in the Gas cap.

1.14.  "Subordinate  Petroleum  Components"  means  various  mineral  and  other
elements.

1.15.  "Work  Program"  means all programs  that are prepared and issued for the
implementa- tion of the Petroleum  Activities in accordance with the License and
the terms and conditions of the Agreement.

1.16.  "Investment"  means all amounts  required  for the  Petroleum  Operations
including properties, rights on properties and intellectual rights.

1.17.  "Effective  Date"  means the date when  this  Agreement  is signed by the
Parties.

1.18.  "Commencement Date of the Productive  Production" means the date when the
income  achieved  from  the  sale of the  Petroleum  becomes  in  excess  of the
expenditures made for the production and sales of the same.

1.19.   "Payout"  means  the  date  when  Contractor  has  repaid  Investor  the
Investment.

1.20.  "Shareholders  Of The  Kazakhstan  Side  Profit"  means the amount of the
Shareholders of the Kazakhstan Side are collectively  entitled to as their share
of the distributable  profit of Contractor.  Such amount shall be calculated and
distributed  on a  quarterly  basis,  unless the Board of  Directors  determines
otherwise, and shall be equal to 50% (fifty percent) of the amount of Contractor
cash flow remaining after  subtracting from  Contractor's  gross revenue for the
quarter:  Royalty,  Investment  Recovery,  all  operating  expenditures,  Fiscal
Obligations  as  required   pursuant  to  this   Agreement,   any  other  actual
expenditures made by Contractor during the quarter.

1.21.  "License" means a permission granted by the Government of the Republic of
Kazakhstan  to  the  Contractor  for  conducting   exploration   and  production
activities for a period of 25 (twenty five) years within the Agreement Field.

1.22.  "Delivery  Point"  means the point where the link is  established  to the
existing pipeline for the further  transportation of the product.  Such point is
determined  with the mutual  agreement of the Parties and shall be placed either
within the boundaries of the Agreement Field or outside of such  boundaries,  in
the most economical point for the transportation of the product.

                                        4

<PAGE>

1.23.  "Force-Majeure"  means any  occurrence  that can not be  predicted by and
outside the reasonable  control of the Parties preventing or delaying any of the
Parties' timely  performance of obligations.  (Such as riot or civil  commotion,
declared or undeclared war, hostilities, actions of not being compliant with the
law,  terrorism,  natural  hazards  and  disasters,   decisions  issued  by  the
Government Authorities, etc.).

1.24.  "Investor" means Central Asian Petroleum (Guernsey) Limited who possesses
the 50% (fifty percent) shares of closed type Karakuduk Munay Inc. Joint Venture
or any other juridical body that its shares are transferred  and/or assigned to.
The priority for the  assignment of the shares is given to the  Shareholders  of
the Kazakhstan Side.

1.25.  "Investment  Recovery" means the amount of each  installment  Investor is
entitled to receive as partial  repayment of the Investment from the Contractor,
inclusive  of  interest  at the  rate  of  Libor  plus 1%  (one  percent).  Such
installments  shall be  calculated  and paid on a  quarterly  basis and shall be
equal to 65% (sixty-five percent) of Contractor's gross revenues after deduction
of Royalty (State Share).  Any amount of  Investment,  plus interest,  remaining
unpaid after each  quarterly  installment  shall be carried  forward to the next
quarter until the full amount of the Investment,  plus interest,  is repaid. The
Investment Recovery shall be exempt from all Fiscal Obligations.

1.26.  "Investor  Profit"  means the amount the  Investor  is entitled to as its
share of the dividend (distributable profit) of Contractor. Such amount shall be
calculated and distributed on a quarterly  basis,  unless the Board of Directors
determines otherwise, and shall be equal to 50% (fifty percent) of the amount of
Contractor cash flow remaining after subtracting from Contractor's gross revenue
for the quarter.  Royalty,  Investment  Recovery,  all  operating  expenditures,
Fiscal Obligations as required pursuant to this Agreement,  and any other actual
expenditures made by Contractor during the quarter.

1.27. "Libor" means the annual interest rate on US Dollars ("US$") for one night
offered to the leading banks of the London  Interbank by Citibank  N.A.,  London
Branch on the 15th day of each month at 11:00 hr. and published by the Financial
Times Journal in London/United  Kingdom.  In case the 15th day of the month is a
holiday  then the  immediately  subsequent  working day shall be accepted as the
base date for the purpose of such calculation.

1.28.  "Royalty (State Share)" means the percentages of the gross  production of
the Contractor as shown in Clause 9.3.1. hereinbelow.

1.29.  "Board of Directors" means the highest  Executive  Committee of Karakuduk
Munay Inc.  (Contractor)  consisting of 8 (eight) members, 4 (four) members each
assigned by  Shareholders  of the Kazakhstan  Side including the Authorized Body
and by the Investor.

1.30. "Fiscal  Obligations"  means without  limitations:  all taxes,  royalties,
levies,  imposts, fees, fines,  withholdings,  forced savings,  mandatory funds,
escrow's,  accounting  or  valuation  procedures  which  impact  the  timing  or
magnitude of Shareholders Of the Kazakhstan Side Profit,  Investor's  Profit, or

                                        5

<PAGE>

Investment  Recovery or any other amounts to be received by the  shareholders of
the Contractor.

                                   SECTION - 2

                                OWNERSHIP RIGHTS

2.1. The  Contractor,  as a result of the  expenditures  incurred and due to the
obligations  undertaken,  has  the  exclusive  right  to  perform  any  type  of
activities   to  conduct   research,   exploration,   development,   operations,
production,  sales  activities,  transportation,  export,  and any other related
activities or sub-activities  regarding any, and all,  Hydrocarbon  (hereinafter
referred to as "HC") reserves within the boundaries of the Agreement  Field, for
the full term of this Agreement.

Republic of Kazakhstan has the authority to protect the ownership right of earth
and  subsurface.  Contractor  is not  the  owner  of  natural  resources  in the
Agreement Field and can only demand the HC produced in accordance with the terms
and conditions of this Agreement.

2.2.  Contractor  receives the  ownership to all HC produced  from the Agreement
Field  at the  point  of  severance  from  the  wellhead,  free of any  debts or
financial obligations except as may be provided for in this Agreement.

2.3. If the  Government of the Republic of Kazakhstan  elects to take Royalty in
kind as provided in Clause 9.3.1. then any such amount of HC shall be brought to
the  Point  of  Delivery  by the  Contractor  and  shall be  transported  by the
Authorized  Body on behalf  of the  Government  of the  Republic  of  Kazakhstan
promptly  without any delay.  Contractor  can transport and sell the HC share of
the  Government  if the  Parties so agree.  In such a case,  Contractor  has the
authority  to buy and sell the HC share  of the  Government.  If the  Government
intends to raise a demand to have its own share  partially or wholly sold by the
Contractor,  then  Government  shall  notify the  Contractor  in written  form 3
(three)  months before the end of each calendar  year and  semi-annual  year and
shall reach an agreement with the Contractor  about the terms and conditions and
time period for the sale of its own HC share by the  Contractor.  Contractor can
be compensated as a result of performing such services. This compensation should
be equal  to  transportation  and  marketing  expenses.  Therefore,  the  amount
received by the Government out of this HC shall equal to the amount obtained out
of sale after  deduction of the mentioned  compensation.  In case the Contractor
wishes  to buy the HC  share  of the  Government,  then  sales  price  shall  be
determined in accordance  with Clause 9.4.2.  In such a case,  the payment shall
take place on monthly basis. (Within 30 (thirty) days commencing from the end of
the month that the HC share of the Government is sold.)

2.4. Contractor shall bear the ownership of the tangible assets in the Agreement
Field  after  the  execution  of  the  Assignment/Delivery  Certificate  of  the


                                        6

<PAGE>



Karakuduk  Field in accordance with the balance sheet of the Ministry of Geology
and Preservation of Underground Resources (GHK Zharkyn).

The right of  ownership  of the  tangible  assets  shall be  transferred  to the
Authorized Body after the completion of the  amortization.  Contractor  shall be
entitled to use these  amortized  tangible  assets  during the whole term of the
Contract free of charge.

2.5. Contractor possesses all and every type of rights on any type of geological
and other  information  received in  relation  to the Field  Assignment/Delivery
Certificate  of the  Karakuduk  and  on any  type  of  geological,  geophysical,
technical and other information  obtained by the Contractor during the course of
Petroleum Activities.

Contractor, during the term of the Agreement shall give all obtained information
related  with the  subsurface  to the  Ministry of Geology and  Preservation  of
Underground  Resources of the Republic of Kazakhstan  in accordance  with clause
3.37 of the Law of "Subsurface Resources and Raw-Material  Operation" subject to
and without prejudice to its right of bearing ownership on this information.

                                   SECTION - 3

                          DURATION OF THE AGREEMENT AND
                                   TERMINATION

3.1.     Duration

         3.1.1.  Duration of the  Agreement  is  continuous  30  (thirty)  years
         commencing  from the date of the execution of this  Agreement and later
         on can be extended to a date to be mutually  agreed between the Parties
         as long as Productive  Production of Petroleum  and/or Gas is continued
         in the Agreement Field.

         3.1.2. The information  regarding the necessary  funding/financing,  as
         convincing  evidence shall be submitted to the Authorized Body prior to
         the operations.

         3.1.3.  Contractor,  prior to Field research and operation  activities,
         shall  include  the  assets  in  the  Field  and  the   geological  and
         geophysical  data  related to the  Agreement  Field to its own  balance
         sheet in accordance with the issued Assignment/Delivery Certificates.

3.2.     Exploration Phase

Exploration  activities in the Field shall start within 1 (one) month commencing
from the date of the execution of this Agreement,  and/or as indicated in Clause
9.1.5.  hereinbelow,  to conduct the project studies and field seismic  surveys,


                                        7

<PAGE>


preparation and operation of temporary production projects, the evaluation of HC
reserves by determining the geological-mining characteristics and the production
capacity of the Field,  preparation and completion of the technology and project
documentation needed for the industrial usage of the Field and finally to secure
the  necessary  permissions  and the required  funding/financing.  The Petroleum
produced  (which cannot exceed  100,000 (one hundred  thousand)  tons during the
full  exploration  phase) from the exploration and development  wells during the
testing of the wells,  will  belong to the  Contractor  and will be  utilized to
cover the expenditures  incurred for the Petroleum  Activities.  The exploration
phase  will be 3 (three)  years.  The  forgoing  shall  not in any way  diminish
Contractor's  exclusive right, even after the initial 3 (three) year exploration
phase,  to  conduct  exploration,  development,  production  and  other  related
activities  in all areas  within the  Agreement  Field for the full term of this
Agreement, as provided in Clause 3.1.

3.3.     Development and Production Phase

         3.3.1.  Operation  Activities of the  Agreement  Field shall be started
         within 6 (six) months  following the approval of Technology and Project
         Documentation  in the  required  order.  Within  the  capacity  of this
         operation,  completion  of the  exploration  and  the  construction  as
         required for the production wells as indicated in the Project Documents
         and the disposal of water and/or the  application  and  realization  of
         other  technologies  as  necessary  to obtain  maximum  Petroleum,  are
         included.  For the  purpose of all permits and  licenses  required  for
         development of the  Hydrocarbon  reserves in the Agreement  Field,  the
         entire  Agreement  Field shall be  considered  a single  Field for such
         purpose,  and such permits and licenses shall permit development of any
         and all  Hydrocarbon  reserves  within the Agreement Field for the full
         term of this Agreement.

         3.3.2. Petroleum development, production and sales activities may start
         before,  but  shall  start no later  than  upon the  conclusion  of the
         initial exploration phase and Contractor's obtaining of the permits and
         licenses to develop the Agreement Field.

3.4.     Termination

         3.4.1.  Contractor  may terminate  this Agreement by serving 60 (sixty)
         days  written  notice to the  Authorized  Body without any cause at any
         time.  Termination shall not exempt the Contractor from its obligations
         which  were due but not  fulfilled  prior to the  Contractor's  written
         notice in this respect. Provided, however, that should at the time such
         obligations  are due to be performed  and  Contractor  terminates  this
         Agreement: (i) a reasonable dependable means of export, or authority to
         export from applicable government authorities, to export the reasonably
         projected  production capacity are unavailable to Contractor;  or, (ii)
         the available means of export become uneconomic;  then Contractor shall
         be exempt from such obligation.


                                        8

<PAGE>

         3.4.2.  If the  Contractor  commits a material  breach of the Agreement
         and/or the License,  the Authorized Body shall have the right to demand
         that such breach be remedied  within a  reasonable  period of time.  If
         such  breach is not  remedied  within  such  period of time  reasonably
         requested, by the Contractor to remedy such breach, the Authorized Body
         shall have the right to notify the  Contractor of  termination  of this
         Agreement and such termination  shall become effective 90 (ninety) days
         after such written  notice,  unless,  Contractor  dispute such material
         breach,  or such remedy of same. If  Contractor  disputes such material
         breach or such remedy of same,  then the matter shall be  determined by
         arbitration in accordance with Clause 11.9.

         3.4.3.  In case of the  termination  of the  Contract;  Contractor  can
         receive back all of its assets existing in the Agreement Field of which
         their cost has not been fully amortized before  termination.  Amortized
         assets are the property of the Authorized Body but  nevertheless can be
         used by the  Contractor  during the term of the  Agreement.  In case of
         termination, Contractor shall hand-over and deliver the Agreement Field
         to the related  State  Authorities  in the condition as required by the
         principles  of mining and health,  and of the  protection of subsurface
         resources and natural environment.

                                   SECTION - 4

                        PRINCIPLE RIGHTS AND OBLIGATIONS
                            OF THE CONTRACTOR AND THE
                                    INVESTOR

4.1.     Rights of the Contractor and the Investor

Contractor has the following rights and authority:

         4.1.1.  The exclusive right of conducting  Petroleum  Activities in the
         Agreement Field in accordance with the provisions of this Agreement.

         4.1.2.  Right of entry  to the Agreement  Field and to the other fields
         in order to conduct Petroleum Activities.

         4.1.3.  Right for the  utilization of local and  world-wide  known most
         effective  methods and  technologies  in order to conduct the Petroleum
         Activities.

         4.1.4. Right for selecting any type of activity form and administrative
         organization  structure within the boundaries of the purpose defined in
         the Agreement.

         4.1.5.  Right to  construct and equip industrial and social  facilities
         in the Agreement Field and  to use public  facilities and communication
         systems  in  or  outside  of  the  Agreement  Field  provided  that  an
         agreement is reached  with the  possessors  of such  facilities in that
         respect in order  to maintain the activities  under normal and standard
         conditions.

                                        9

<PAGE>


         4.1.6.  Right  of  utilizing  the  services  of  local  and/or  foreign
         Sub-Contractors who have required technical  facilities and experience,
         in  case  of  necessity  during  the  implementation  of the  Petroleum
         Activities.

         4.1.7.  Right of using own Petroleum Profit and the related products in
         the way as desired.

         4.1.8.  Right of participating  in the Petroleum  Activities and in any
         type of other  activities  conducted in other fields  either within the
         lands or outside the lands of the  Republic of  Kazakhstan  and opening
         branch offices and liaison offices thereof.

         4.1.9.  Right to assign and transfer  wholly  and/or  partially its own
         rights,  priorities and benefits to third parties or to authorize those
         by  another  method  provided  that  practice  of such  right  shall be
         compliant with the provisions of the Agreement and shall be notified to
         the Authorized Body in written form. Such  notification  shall contain,
         as  being  completely   compliant  to  this  Agreement,   all  changes,
         amendments and additions  implemented prior to delivery for the purpose
         of identifying assignee and/or authorized party as the case may be.

         4.1.10.  Right of submitting  applications to the Government  and/or to
         the  Authorized  Body for the  re-negotiation  of the  License  and the
         contractual terms and conditions in the case of occurrences outside the
         contractual terms and conditions after the execution of the Agreement.

         4.1.11.  Right of priority in the case of  extension of the term of the
         existing  License and Agreement and/or executing a new agreement in the
         Agreement Field.

         4.1.12.  Right to relinquish a portion of the Field in accordance  with
         the conducted  program studies or relinquishing a portion of the Fields
         before completing such studies.

         Nevertheless,  the  relinquished  portion of the Field  shall be in the
         simple  geometric  shape when it is divided from the Agreement Field by
         straight or cracked line.

         4.1.13.  Right to export,  and the right to receive  export  quotas and
         export  licenses  for the  full  production  capacity  of HC  from  the
         Agreement Field.  Additionally,  the right, but not the obligation,  to
         negotiate   Contractor's   own  quota  with  other  related   countries
         authorized  bodies  and  establishments,  and to have the  Republic  of
         Kazakhstan  recognize  and grant export  quotas and export  licenses in
         regard to any such quota.


                                       10

<PAGE>

         4.1.14.  Right  to  use  the  existing  Pipeline  for  the  purpose  of
         transferring  the produced  Hydrocarbons to the Baltic Sea,  Kainingrad
         and  Vendspils  ports and/or to Black Sea,  Novorosiysk  Port.  And the
         right of priority to use all other available  means of  transportation,
         storage,  and marine  terminals.  The  transportation  fees and tariffs
         charged to the Contractor shall be no more than those paid by any other
         transporter.

         4.1.15. Right to unobstructed use of the surface of the Agreement Field
         in  conjunction  with  Petroleum  Activities,  and the  right  to water
         necessary for Petroleum Activities.

         4.1.16.  Right to keep hard  currency  proceeds  of HC  sales,  free of
         mandatory  currency  conversions  in  accordance  with  the laws of the
         Republic of Kazakhstan.

         4.1.17.  Right to have a hard currency bank account within the Republic
         of Kazakhstan  and hard  currency bank accounts  outside of Republic of
         Kazakhstan as Contractor may deem  appropriate,  in accordance with the
         laws of the Republic of Kazakhstan.

         4.1.18.  Right to import and export  same as that  provided  to Foreign
         Contractor and Foreign Contractor's personnel pursuant to Clause 9.2.

         4.1.19.  Right  to defer  the work  obligations  of the  Contractor  as
         mentioned in the License,  in case of inability for the  exportation of
         Hydrocarbons, for the same period.

         4.1.20.  Investor possesses the following rights:

                  o        Right to Investment Recovery and Investor Profit;

                  o        Right of  having  been  exempted  from  every type of
                           Fiscal Obligations on the Investment Recovery;

                  o        Right to  export,  and the  right to  receive  export
                           quotas and export licenses for all Crude Oil taken in
                           kind by the  Investor  pursuant  to  this  Agreement.
                           Additionally,  the right, but not the obligation,  to
                           negotiate  Investor's  own quota with  other  related
                           countries authorized bodies and establishments and to
                           have the Republic of Kazakhstan,  recognize and grant
                           export  quotas and export  licenses  in regard to any
                           such quota;

                  o        Right to use the existing Pipeline for the purpose of
                           transferring  the produced  Hydrocarbon to the Baltic
                           Sea,  Kainingrad and Vendspils  ports and/or to Black
                           Sea,  Novorosiysk  Port. And the right of priority to
                           use all  other  available  means  of  transportation,
                           storage,  and marine  terminals.  The  transportation
                           fees and tariffs  charged to the Investor shall be no
                           more than those paid by any other transporter;


                                       11

<PAGE>


                  o        Right to market and sell any, or all, Crude Oil taken
                           in  kind  to  any  purchaser  within  or  without the
                           Republic of Kazakhstan;

                  o        Right to retain export proceeds outside of Kazakhstan
                           without any  obligation  to return same to Kazakhstan
                           after fulfilling the Fiscal Obligations  mentioned in
                           this Agreement;

                  o        Right to  export  all  Investment Recovery, Investors
                           Profit and all other amounts due Investor pursuant to
                           this Agreement;

                  o        Right  to  keep  foreign  currency  and  to  exchange
                           Republic of Kazakhstan currency for hard currency and
                           the right to exchange  hard currency for the Republic
                           of  Kazakhstan  currency at the most  favorable  rate
                           available in the Republic of Kazakhstan in accordance
                           with the laws of the Republic of Kazakhstan; and

                  o        Right to import and export  same as that  provided to
                           Foreign Contractor and Foreign Contractor's personnel
                           pursuant to Clause 9.2..

4.2.     Obligations of the Contractor

Obligations of the Contractor during the  implementation of the Agreement are as
follows:

         4.2.1.  Using the  Agreement Field only for the purposes defined in the
         Agreement.

         4.2.2. Detailed geological studies and investigations of the subsurface
         resources as well as supply of the Markschader service and to guarantee
         that all the  reports  issued  about  the  product  and the  associated
         products are true and correct.

         4.2.3.  In case of  deficiencies  in the legislation of the Republic of
         Kazakhstan  with reference to the Petroleum  Activities,  for the cases
         mentioned  herein  below,  Contractor  shall  follow and  practice  the
         International Principles:

                  o        Field usage

                  o        Proper implementation of the Petroleum Activities for
                           the security of personnel and population.

                  o        To  protect   subsurface   resources,   air,   earth,
                           forestry,   water,   zoological  animates  and  other
                           facilities  from  harmful  effects  arising  from the
                           Petroleum Activities. Nevertheless,  Contractor shall
                           have no  responsibility  for the damages given to the
                           natural  environment  prior to the effectively of the
                           Agreement.

                                       12

<PAGE>


                  o        To  protect  places  and  areas  with  historical and
                           cultural value.

                  o        To indemnify the nature and lands damaged  during the
                           course of the  Petroleum  Activities  at its own cost
                           for the purpose of future utilization.

         4.2.4.  To permit all types of activities and studies for the research,
         exploration,  operation  and  production  of other  natural  resources,
         excluding  HC,  to be  conducted  by  other  persons  including  giving
         permission  for  the  usage  and   utilization  of  the   communication
         facilities and other public  facilities  provided that such  activities
         shall not effect and prevent the Petroleum  Activities in the Agreement
         Field.

         4.2.5. To be compliant with the technological  schedules,  drawings and
         projects  approved  within the scope of the current  mining study norms
         related to the conduct of Petroleum Activities.

         4 2.6.  To give  priority  to the  equipment,  materials  and  products
         manufactured locally in the Republic of Kazakhstan as long as these are
         competitive in terms of quality,  price,  working capacity and delivery
         terms.

         4.2.7.  To give  preference  to the  services  of Kazakh  Entities  and
         Organizations  such  as  airways,   railways,   hydraulic  works,  etc.
         including the usage and utilization of motor vehicles to be used during
         the course of Petroleum Activities, as long as these local services are
         competitive in terms of price, effectively, and quality.

         4.2.8. To give priority to the work-force of the Republic of Kazakhstan
         during the course of the  Petroleum  Activities  by employing  required
         qualified engineers and technical team and where there is a shortage or
         insufficiency, to provide training and education opportunities to these
         staff at the account of the  Contractor in  accordance  with the agreed
         program.

         4.2.9.  To submit to the Board of Directors;  the program of determined
         studies,   and  every   type  of   information   obtained   during  the
         implementation of those of those (geological,  industrial, statistical,
         etc. account reports in force) in accordance with the standards.

         4.2.10.  To give  permission to the Auditing  Organs of the Republic of
         Kazakhstan  for free entry and visit the  work-place,  to provide  them
         with all necessary  documentation  and  appropriate  conditions for the
         purpose of enabling these units to perform their duties properly.

         4.2.11.  In case of a necessity,  to provide the  information  obtained
         during the course of the  Petroleum  Activities  to the third  parties,
         provided  that a mutual  agreement  is reached  by the  Parties in this
         respect.

                                       13

<PAGE>


         4.2 12. To  effectuate  tax payments and other  payments as provided in
         the existing legislation of the Republic of Kazakhstan.

         4.2.13.  In case of a cease  the  rights  on the  Agreement  Field,  or
         partial  relinquishment  in accordance with Clause 4.1.12  hereinabove,
         the  Contractor,  shall rearrange the land by clearing and removing all
         mass and  garbage  occurred  as a result  of the  Petroleum  Activities
         related with the  Agreement  at its own cost,  in  compliance  with the
         instructions of State Mining, Health,  Subsurface Resources and Natural
         Environment Protection Organs.

         4.2.14.  During the term of the Agreement it is expected that the total
         financial  requirements  will  reach  to an  aggregate  amount  of US $
         216,000,000 (two hundred sixteen million US Dollars).

                                   SECTION - 5

                          ASSISTANCE AND SUPPORT OF THE
                                 AUTHORIZED BODY

5.1. Authorized Body, where necessary,  shall provide help and assistance to the
Contractor for the following matters:

         o        Within  and  outside  the   boundaries   of  the  Republic  of
                  Kazakhstan;  to  obtain  all  required  licenses  and  permits
                  necessary for the  transportation  of products,  raw-materials
                  and consignment.

         o        The application and usage of the latest techniques, technology
                  and equipment.

         o        During the purchase of foreign  technology and  equipment,  to
                  prepare and issue customs  permissions  and to provide foreign
                  currency.

         o        To provide  all  required  permissions  and  licenses  to open
                  Foreign   Currency  Bank  Accounts   within  and  outside  the
                  boundaries of the Republic of Kazakhstan.

         o        To obtain  every type  of geological,  geophysical,  etc. data
                  belonging  to entities  and/or  organizations  related  or not
                  related  with  the  Agreement  field  but  can be  used for an
                  efficient Petroleum Activity.

         o        To apply to obtain the approval of the Cabinet of Ministers of
                  the  Republic of  Kazakhstan  regarding  the  exemption of the
                  export duty for the exportation of the HC.


                                       14

<PAGE>

5.2.  Authorized  Body,  by  furnishing  the  Contractor  with the  authority of
conducting Petroleum Activities within the boundaries of the Agreement Field, is
deemed to be having delivered the authority and duty of auditing the realization
of the Petroleum Activities to the Board of Directors in accordance with Section
6 hereto.

                                   SECTION - 6

                               BOARD OF DIRECTORS

6.1.  In order  to  realize  this  Agreement,  the  Board  of  Directors  of the
Contractor  should be established  within 30 (thirty) days  commencing  from the
execution date of this  Agreement.  Board of Directors shall realize the general
management  and control of the  Petroleum  Activities  including the approval of
Working Program, Budget, and Work and Project Documentation.

6.2. Board of Directors shall consist of 8 (eight) members  (referred to here as
"Members"),  4 (four)  members each assigned by  Shareholders  Of The Kazakhstan
Side  including  the  Authorized  Body  and by the  Investor.  Voting  shall  be
conducted in accordance with the Articles.

6 3. All other items which are not provided  otherwise in this Agreement related
to the  rights,  obligations  and  authorities  of the  Directors  or  Board  of
Directors will be applicable as mentioned in the Articles.

                                   SECTION - 7

                     OPERATIONAL AND FINANCIAL REQUIREMENTS
                                 AND THE BUDGET

7.1.     Exploration

The project related to the research,  exploration,  seismic operations and trial
production  of the wells  drilled in the Field shall be  prepared in  accordance
with the  principles and the  instructions  in force related with and applicable
for  geological   exploration  and  petroleum  production   activities  for  the
protection of subsurface resources and the population;  providing all geological
investigations,  natural environment and other operational buildings, facilities
and equipment from the harmful effects of the activities and studies  conducted.
The project, as required,  shall be confirmed and attested by the authorities of
state mining control, subsurface resources,  economical and biological resources
and hygienic and public health control. Geological and geophysical working plans
shall be  approved by the Board of  Directors,  in  accordance  with the current
practices.

                                       15

<PAGE>

The following issues shall be confirmed for the field trial operation project:

         o        The  quantity  and   the  location  of  the  exploration   and
                  production wells.

         o        Geological,  mining,  geophysical  and laboratory  studies and
                  investigations conducted for the determination of the physical
                  and  hydrodynamic   characteristics,   of  petroleum   stratum
                  particularities  and productive  stratum and of the production
                  possibilities in the wells.

         o        Predictions  for Petroleum and Gas production  levels and when
                  necessary  predictions  for water pumping  capacity during the
                  trial production.

         o        Evaluation and the confirmation of the ecological payments and
                  of the activities  for the protection of subsurface  resources
                  and  natural  environment  and for the  supply of  safety  and
                  security during the Petroleum  Activities in the Field and the
                  construction of drainage.

On  the  basis  of  the  trial  study   approved  by  the  Board  of  Directors,
field-arrangement,   project-account  documentation  containing  the  issues  of
Petroleum  Gas and  Condensate  and drainage  usage shall be prepared and issued
within the trial production period.

7.2      Development and Production

         7.2.1.  Preparation of the project documentation and the conduct of the
         design works for the Field and to put the Field into the operation, can
         only be realized  following the trail  production by the state reserves
         commission at the reserves recognized by the international standards in
         accordance  with  the  Petroleum  production  and  the  "Principles  of
         Operating Petroleum and Gas Fields."

The project  documentation  (Field operation  technical chart) shall be prepared
and issued in  accordance  with the  provisions of by-laws in force related with
the protection of sub-surface resources, natural environment, health and mining.
The  organization  of  production  of Petroleum  from the Field as an industrial
product  shall be realized in accordance  with the project  budget that has been
prepared in compliance with the field operations  technical chart,  approved and
attested by Board of  Directors.  Project  documents  related with the Petroleum
Activities shall include the following items;

         o         Determination of  the production targets,  method of starting
                   the  operation,  selection of the  stimulation methods  to be
                   applied to the wells,

         o         Determination of the production wells,


                                       16

<PAGE>

         o        Production  dynamics of  the Petroleum, Gas and liquids in the
                  wells, injection of chemicals,

         o        Demands and recommendations  about the program of the well and
                  the drilling activities, selection of well location,

         o        Recommendation for drilling operation, equipment and materials
                  used on the surface and in the well,

         o        Recommendation for the production of the wells and the demands
                  for collection  system (including the collection and the usage
                  of the associated gas and the water),  proposals for the motor
                  vehicles, machinery-equipment and their locations related with
                  the Petroleum production, storage and transportation,

         o        Proposals  for  the supply  of materials and equipment for the
                  usage of  production  and other services,  in order to realize
                  the  principles of the  capital  investment and  the petroleum
                  production,

         o        Proposals  for  the  actual  period  for  the field  operation
                  phases,   necessary  expenditures,  evaluation  of the capital
                  investment,

         o        Determination   of  the  types  and  the   quantities  of  all
                  activities and studies needed for the exploration of the Field
                  and the  principles  of operating a petroleum and gas field as
                  well as the  determination of the rules and principles for the
                  protection  of  the  sub-surface   and  natural   environment,
                  job-safety, health and appropriate fire and security rules.

         7.2.2  Production of Associated Gas

The Associated Gas, being produced  together with the Petroleum shall be used in
line with the needs of the Contractor  (heating,  product  heating,  etc.).  The
usage of the  Associated  Gas  shall  be made in  accordance  with  the  project
technical documentation.  In case there is an impossibility for the usage of the
Associated Gas (this will be confirmed on the basis of project and technological
requirements),  the Associated  Gas shall be flared,  with the permission of the
Ministry of Environment.

7.3.     Procedures and Approval Method of the Operational Documentation

Project  documentation related with the research,  exploration,  development and
production  activities  defined in  clauses  7.1 and 7.2 shall be  prepared  and
issued by the Contractor in accordance with the determined and agreed principles
and  procedures  (or state  control shall be applied to those  documentation  in
terms of being  compliant  with  working  conditions,  job  safety,  technology,

                                       17

<PAGE>


ecology and health regulations) and shall be submitted to the Board of Directors
for investigation  and approval.  Such  documentation  shall receive approval or
disapproval within 30 (thirty) days, commencing from the date of delivery to the
Board.  In case of a  requirement  by the  Authorized  Body for a change  and/or
modification  to  the  project  documentation,  following  the  receipt  of  the
notification by the Parties containing changes and the modifications required to
be  conducted  by the  Contractor,  the Board  shall meet to discuss  such issue
within  15  (fifteen)  days  commencing  from  the date of the  receipt  of such
notification.  Changes and modifications  agreed by the Parties and incorporated
to the project documentation shall be deemed to be accepted and approved. Any of
the Parties who could not reach an agreement about the project shall present the
case to an industrial  specialist  (expert) to resolve the disputes.  Contractor
not  accepting  the  project  is not  obliged  to finance  the  studies  and the
activities and shall be reimbursed the cost of all Petroleum  Activities already
conducted by the Contractor.

Following the acceptance of the project documentation related with the Petroleum
Activities at every stage, Contractor, at the soonest time possible and prior to
the first month of the each calendar year,  shall prepare and issue the detailed
plan and budget of the works for the subsequent  year and shall submit it to the
Board of Directors for review and approval.

Contractor at any time may submit budget changes and  modifications to the Board
of Directors about research, exploration,  operation and production. All changes
and modifications shall be prepared and issued in accordance with the principles
and procedures defined in Section-6 hereto.

As a result of the  additional  information  obtained  during  the course of the
Petroleum  Activities,  in case the  Agreement  Field is determined as larger or
smaller than previously considered, then such field shall be expanded or reduced
to the previously  considered magnitude of the Agreement Field.  Agreement Field
shall be extended as required with the execution of an amendment to the previous
Agreement.

Contractor  shall  prepare a general plan for the purpose of  improving  working
conditions for the subsequent calendar year in accordance with the principles of
job-safety  and  technical  safety  and  security  applicable  in the Region and
following having those confirmed by the organs of  Gosgortehnadzor  in line with
the  procedural  applications  shall  present  to the  Board  of  Directors  for
approval.

7.4. Petroleum  Activities are conducted in accordance with the Work Program and
the Budget  (referred to here as "Budget")  approved by the Board of  Directors.
The General Manager and the Assistant  General  Manager of the Contractor  shall
jointly  prepare and submit the Work  Program and the Budget for the  subsequent
year, 3 (three)  months prior to the start of that program year for the approval
of the Board of Directors.  Any changes and/or amendments to be made to the Work
Program  and to the  Budget  within the year  shall  also be  submitted  for the
approval of the Board of Directors separately.


                                       18

<PAGE>

                                   SECTION - 8

                          EXPENDITURES AND COMPENSATION

8.1      Payment of Expenditures

Investor  shall  provide  the  Investment  to  the  Contractor   excluding  cash
requirements which cannot be met by the self generated income of the Contractor,
as  Contractor  may determine  pursuant to the  Articles,  excluding any amounts
Contractor may wish to borrow from third parties.  All such amounts  provided as
the Investment by the Investor to Contractor,  shall be repaid by the Contractor
to the Investor as Investment Recovery.

                                   SECTION - 9

                       COMMERCIAL AND FINANCIAL TERMS AND
                                   CONDITIONS

9.1      Financial Matters

         9.1.1.  All  calculations  to  be made  between the Parties in relation
         with the Agreement shall be made in Tenge and US$.

         9.1.2.  The  price  for  Hydrocarbons   voluntarily   marketed  by  the
         Contractor in the local market within the boundaries of the Republic of
         Kazakhstan shall be freely decided by the Contractor.

         9.1.3. Foreign currency exchange  transactions to be carried out by the
         Contractor shall be in compliance with the laws and regulation in force
         in the Republic of  Kazakhstan.  Contractor  is free to use the foreign
         currency obtained out of the Petroleum Activities within or outside the
         boundaries  of  the  Republic  of  Kazakhstan.   All  foreign  currency
         transactions related with the Petroleum Activities shall be carried out
         in US$ or in any other convertible  currency  depending upon the mutual
         agreement between the Parties.

         9.1.4. Re-exportation of the foreign currency brought into the Republic
         of Kazakhstan by the foreign  sub-contractors for the implementation of
         the Petroleum  Activities shall be realized in accordance with the laws
         and regulations of the Republic of Kazakhstan.

         9.1.5.  Financing  of the  Petroleum  Activities  has to start within 6
         (six) months  following  the secure of the License for the Land defined
         in this Agreement (Land allocated for the Petroleum Activities).


                                       19

<PAGE>


9.2.     Customs

         9.2.1.  In  case  of a  requirement  for  the  services  of  a  foreign
         Contractor in order to fulfill the obligations and terms and conditions
         of this Agreement,  the foreign SubContractor can import all equipment,
         machinery,  vehicle, work-shop,  material, spare parts related with the
         Petroleum  Activities and its own goods into the Republic of Kazakhstan
         free of custom  duties and funds  without  any  prohibition.  The above
         mentioned consignment includes, without any limitation, mobile dwelling
         units, equipment,  raw-materials,  sub-materials,  convenient products,
         mobile offices, office equipment and stationary,  furniture,  audio and
         video   equipment,   communication   equipment   (including   satellite
         communication),  medical and  educational  equipment,  hobby and sports
         facilities and every type of  educational  and  information  containing
         press and books  provided that these are not  prohibited by the laws of
         the Republic of  Kazakhstan.  The machinery and equipment to be brought
         shall be fully compliant to the laws and regulations of the Republic of
         Kazakhstan  in terms of  technical  security  and  safety,  health  and
         hygiene norms, protection of subsurface and natural environment.

         9.2.2.  The personnel of the Foreign  Sub-Contractors  dealing with the
         Petroleum  Activities can import into the Republic of Kazakhstan  their
         own private  property  and goods as well as  house-hold  goods with the
         exemption  of taxes in order to meet with their own and  family  needs,
         provided  that  it is not  against  the  laws  and  regulations  of the
         Republic of Kazakhstan.

         9.2.3. Any goods and property imported to the Republic of Kazakhstan in
         accordance  with clauses 9.2.1 and 9.2.2 is exempted from custom duties
         and taxes during exportation.

9.3.     Taxes and Payments

         9.3.1.  Fiscal Obligations:

         Contractor  and Investor  shall have the  obligation  to pay the Fiscal
         Obligations,  as  mentioned  in this  Clause  9.3.1.  Any other  Fiscal
         Obligation   applicable   to   Contractor   shall  be  subject  to  tax
         stabilization as mentioned in Clause 9.3.1(H) hereinbelow.

         A)   Contractor   shall  pay  the  following   nation  wide   taxes  in
              accordance with the existing tax law:

                    o    Income Tax at the rate of 30% (thirty percent);

                                       20

<PAGE>

                    o    Dividend  tax  deductions:   The  shareholders  of  the
                         Contractor shall be subject to a 15% (fifteen  percent)
                         Dividend  tax  on  the  distributed  dividends  of  the
                         shareholders.   The  Contractor  shall  be  obliged  to
                         withhold   such  tax  on   distributions   to  Investor
                         (Investors  Profit) or to  Shareholders  of  Kazakhstan
                         Side (Shareholders of Kazakhstan Side Profit);

                    o    Value  Added  Tax at the rate of 20%  (twenty  percent)
                         applied to  expenditures  made locally in the territory
                         of the  Republic  of  Kazakhstan  as  mentioned  in the
                         existing  tax law.  In case of  sales  of  Hydrocarbons
                         through  exportation,  if the paid  Value  Added Tax is
                         more than the  collected  Value  Added Tax  during  any
                         period,  then the  Contractor  shall be  entitled to be
                         reimbursed   either  by  payment  by  the  Republic  of
                         Kazakhstan  or by  crediting  the  amount  against  its
                         Fiscal Obligations. In case of no reimbursement through
                         direct payment or crediting against Fiscal  obligations
                         within 10 (ten) days  following the  application of the
                         Contractor  then the  Contractor  will be  entitled  to
                         receive   interest   on  the  late   reimbursement   in
                         accordance  with  the  tax  laws  of  the  Republic  of
                         Kazakhstan; and

                    o    If   applicable,   tax   on   securities   transactions
                         accordance  with the  existing  laws of the Republic of
                         Kazakhstan.  No income or gain shall be  recognized  by
                         the  Contractor  on the  creation  of or transfer of an
                         interest in the Agreement.

     B)   Contractor  shall pay the  following  special  taxes and  payments  as
          mineral resources user:

                    o    An Excess Profits Tax may be required to be paid by the
                         Contractor  on the basis of the Real  Internal  Rate of
                         Return  (hereinafter  referred  to as  "RIRR")  of  the
                         Contractor, calculated at the end of each calendar year
                         staring from the effective date of this Agreement.  The
                         RIRR  shall  be  determined   after   discounting   the
                         Contractor's annual net cash flow (hereinafter referred
                         to as "NCFs") for  inflation  on a compound  basis from
                         the  effective  date of this  Agreement.  NCF  shall be
                         calculated after reducing Royalty,  operating expenses,
                         other  payments,   amortized   amount  of  the  capital
                         expenditures  and  Fiscal  Obligations,  from the gross
                         revenues of the Contractor. The inflation rate used for
                         this purpose  shall be the World  Consumer  Price Index
                         set  out  in  "Interna-  tional  Financial  Statistics"
                         published by the  International  Monetary Fund for each
                         applicable  year. If any such calculation at the end of
                         any calendar year (excluding Excess Profit Tax for such
                         calendar year but  including  Excess Profit Tax paid in
                         all  prior  years)  produces  an RIRR in  excess of 23%
                         (twenty three  percent),  the  Contractor  shall pay an
                         Excess  Profit  Tax on the  Contractor's  NCF for  that
                         calendar year as follows:

                                       21

<PAGE>

                           (i) an Excess Profit Tax of 10% (ten  percent)  shall
                           be applied to that portion of the difference  between
                           the NCF  corresponding  an original RIRR in excess of
                           23% (twenty three  percent) but less than 25% (twenty
                           five   percent)   and  the  NCF   corresponding   the
                           recalculated RIRR of 23% (twenty three percent).

                           (ii) if the original RIRR is greater than 25% (twenty
                           five  percent),  then the RIRR shall be  recalculated
                           after  subtracting the Excess Profit Tax from the NCF
                           as  calculated  pursuant to (i) above.  If after such
                           recalculation  the RIRR  continues to be greater than
                           25% (twenty  five  percent),  then in addition to (i)
                           above,  an Excess Profit Tax of 20% (twenty  percent)
                           shall be  applied to that  portion of the  difference
                           between such NCF  corresponding  an original  RIRR in
                           excess of 25% (twenty five  percent) but less than or
                           equal   to  30%   (thirty   percent)   and   the  NCF
                           corresponding  the  recalculated  RIRR of 25% (twenty
                           five percent).

                           (iii)  if the  original  RIRR  is  greater  than  30%
                           (thirty percent), then the RIRR shall be recalculated
                           after  subtracting the Excess Profit Tax from the NCF
                           as calculated  pursuant to (ii) above.  If after such
                           recalculation  the RIRR  continues to be greater than
                           30% (thirty percent), then in addition to (ii) above,
                           an Excess Profit Tax of 30% (thirty percent) shall be
                           applied  to that  portion of the  difference  between
                           such NCF  corresponding an original RIRR in excess of
                           30%  (thirty  percent)  but less than or equal to 35%
                           (thirty five percent) and the NCF  corresponding  the
                           recalculated RIRR of 30% (thirty percent).

                           (iv) if the original RIRR is greater than 35% (thirty
                           five  percent),  then the RIRR shall be  recalculated
                           after  subtracting the Excess Profit Tax from the NCF
                           as calculated  pursuant to (iii) above. If after such
                           recalculation  the RIRR  continues to be greater than
                           35% (thirty five percent),  then in addition to (iii)
                           above,  an Excess  Profit Tax of 40% (forty  percent)
                           shall be  applied to that  portion of the  difference
                           between such NCF  corresponding  an original  RIRR in
                           excess of 35% (thirty five  percent) but less than or
                           equal   to  40%   (forty   percent)   and   the   NCF
                           corresponding  the  recalculated  RIRR of 35% (thirty
                           five percent).

                           (v) if the  original  RIRR is greater than 40% (forty
                           percent),  then the RIRR shall be recalculated  after
                           subtracting  the  Excess  Profit  Tax from the NCF as
                           calculated  pursuant  to (iv)  above.  If after  such

                                       22

<PAGE>


                         recalculation the RIRR continues to be greater than 40%
                         (forty  percent),  then in addition  to (iv) above,  an
                         Excess  Profit  Tax of 50%  (fifty  percent)  shall  be
                         applied to that portion of the difference  between such
                         NCF  corresponding  an  original  RIRR in excess of 40%
                         (forty   percent)   and  the  NCF   corresponding   the
                         recalculated RIRR of 40% (forty percent).

                    o    Royalty. The Contractor will give 8% (eight percent) of
                         the  gross   production  as  Royalty.   The  authorized
                         authorities may elect to take Royalty either in cash or
                         in kind; and

                    o    Bonuses. Contractor shall pay US $513,000 (five hundred
                         thirteen  thousand US Dollars)  within 7 (seven) months
                         in equal monthly installments  starting from the end of
                         the 5th (fifth)  month  following the  registration  of
                         this   Agreement  with  the  Ministry  of  Geology  and
                         Preservation   of   Underground   Resources,    as   an
                         unrecoverable signature bonus; and

                         Contractor  will  pay  US  $500,000  (five  hundred  US
                         dollars)  when the  cumulative  production  reaches  to
                         10,000,000 (ten million) barrels and US $1,200,000 (one
                         million  two hundred US  Dollars)  when the  cumulative
                         production   reaches  to  50,000,000   (fifty  million)
                         barrels as one time production bonus.

                  The Royalty and  Production  Bonuses will be considered as tax
                  deductible  expenditures for the calculation of the income tax
                  and the excess profit tax.

         C)       Contractor shall pay the following local taxes and fees:

                    o    Rental for the Agreement Field as agreed with the local
                         authorities,    in   accordance   with   the   existing
                         legislation   of  the  Republic  of   Kazakhstan.   The
                         calculation  of the Rental  shall be same as applied to
                         other petroleum companies working in Mangistau Region;

                    o    Property Tax at the rate of 0,5% (half percent) applied
                         to  depreciated  value  of the  capital  goods  and non
                         productive  assets (non material assets excluded) every
                         year;

                    o    Vehicle tax according to the existing legislation;

                    o    Fee for the registration of the Contractor according to
                         applicable legislation;

                                       23

<PAGE>

                    o    Fee for the licenses for certain  activities  according
                         to the applicable legislation; and

                    o    Fee on auction  sales if  applicable  according  to the
                         existing applicable legislation.

          D)   Contractor  will be obliged to make the  following  payments  and
               deductions:

               o    The contractor is obliged to withhold the income tax for the
                    local and foreign  personnel  working for the  Contractor in
                    accordance with the existing tax law. The foreign  personnel
                    of the  Contractor  will be subject to 0,1% (zero  point one
                    percent)  property  tax on the  properties  they  own in the
                    Republic of Kazakhstan;

               o    Deduction  of 2% (two  percent) for  Employment  Development
                    Fund from the Kazakhstan national personnel salaries;

               o    Local  taxes  for  the  usage  of  water  and  the  forestry
                    resources as mentioned in the  legislation  and the payments
                    for the protection of the environment in accordance with the
                    provisions of the existing legislation;

               o    Payment for the additional and special services  rendered by
                    the authorized governmental organizations in the Republic of
                    Kazakhstan,   if  applicable  to  all  other   citizens  and
                    enterprises of the Republic of Kazakhstan; and

               o    Deductions  for the state social  insurance in regard to the
                    Contractor personnel salaries.

         E)    Transfer Pricing

               If  the  Contractor   applies  in  its  commercial  or  financial
               transactions with a related party prices which differ from prices
               applied between  independent  enterprises,  the Tax Service shall
               adjust the taxpayer's income by the price difference for taxation
               purposes,  if one of the parties  non-resident of the Republic of
               Kazakhstan,  or enterprise  entitled to tax preferences.  The tax
               service,  when  effecting  such  actions,  may redefine the given
               transactions  for the purpose of determining  their actual nature
               and imposing sanctions.


                                       24

<PAGE>



         F)       General Tax Liability

                  The activities of the Contractor  which are not related to the
                  Petroleum  Activities  will be taxed according to the existing
                  legislation.

         G)       Sub-Contractors and affiliates of the Contractor

                  The  Contractor is obliged to inform its  Sub-Contractors  and
                  affiliates for their tax liabilities according to the existing
                  legislation.

         H)       Tax Stabilization

                  The  Parties   hereto  agree  that  this   Contract  has  been
                  negotiated  and agreed upon,  based upon the tax structure set
                  forth herein and the laws of the Republic of Kazakhstan as the
                  date of the execution  hereof.  The  Government of Republic of
                  Kazakhstan  expressly  agrees  that any changes to tax laws of
                  the Republic of  Kazakhstan  occurring  after the date of this
                  Agreement   shall  not  affect  the  tax  obligations  of  the
                  Contractor or the Investor,  save and except where such change
                  is in the nature of a substitution for a tax identified herein
                  and does not cause an  increase in the rate for that tax as of
                  the date of this Agreement.  In case of any  deterioration  in
                  the position of either Party, or the Investor,  resulting from
                  a  change  in  legislation  or any  superseding  international
                  treaty which occurs  subsequent to the execution  date of this
                  Agreement,  the Parties shall meet promptly and shall agree on
                  such  amendments to this Agreement as are necessary to restore
                  the  economic  balance of the  Parties,  or the  Investor,  as
                  applicable.

         I)       Payment

                  The Royalty, bonuses and excess profit tax will be paid by the
                  Contractor  to an account  notified by the chief tax inspector
                  of the  Ministry of Finance.  All other taxes and fees will be
                  paid to the authorities shown in the laws and the state budget
                  of the  Republic  of  Kazakhstan.  The  fines  and  penalties,
                  incurred because of the delayed payments and wrong calculation
                  of the  taxable  income  will be paid in  accordance  with the
                  existing state budget and tax laws.

         J)       Audit right of the tax authorities

                  The tax  authorities  are  entitled  to  audit  the  accounts,
                  foreign banks inclusive,  all bank accounts and the Contractor
                  agreed  to  provide  to  the  tax  authorities,   all  related
                  information and documentation.

                                       25

<PAGE>

9.4      Compensation

         9.4.1  Contractor and Investor may take and freely export its own share
         of the HC produced in accordance  with the terms and conditions of this
         Agreement.

         9.4.2  The  Shareholders  of the  Kazakhstan  Side  may  elect  to take
         Shareholders of the Kazakhstan Side Profit in kind. The Authorized Body
         may elect to take Royalty in kind. Investor may elect to take Investors
         Profit  and   Investment   Recovery  in  kind.  For  the  valuation  of
         Hydrocarbons  for the purpose of  calculating  amounts of  Hydrocarbons
         taken in kind and for all  purposes  pursuant  to this  Agreement,  the
         price  applicable  shall be determined  by a separate  agreement of the
         Parties,  taking into account Hydrocarbon quality and prevailing market
         prices in effect during the period in question at the  locations  where
         the Contractor has been making Hydrocarbon sales, as well as applicable
         transportation  and  marketing  costs at the  market  prices  in effect
         during the period in question.

9.5      Accounting Procedures and Auditing

         9.5.1 The Board of Directors  shall approve an accounting  procedure to
         be applicable to this Agreement and to the Contractor. The expenditures
         of the  Contractor  will be calculated  in US Dollars  during the whole
         term of the Contract in order to calculate the Investment  Recovery and
         the Contractors Profit. Such accounting procedure shall:

               o    provide for  accounting  in US dollars for all  purposes and
                    calculations  pursuant  to this  Agreement  and also a Tenge
                    account  for  the  purpose  of the  inspection  of  the  tax
                    auditors;

               o    provide for  accounting in accordance  with  internationally
                    accepted and  recognized  accounting  systems and consistent
                    with the standard  practice of the  international  petroleum
                    industry as well as the  provisions  of the  Agreement,  the
                    Articles and the Standard Oil and Gas Accounting  Systems of
                    the Republic of Kazakhstan;

               o    provide  for  depreciation  schedules  and for the option of
                    expensing capital expenditures;

               o    provide for the entire Agreement Field to be considered as a
                    single area for the  purposes of the  calculation  of Fiscal
                    Obligations; and

               o    provide for  Contractor  income subject to Income Tax and to
                    be  calculated  by deducting  from gross  revenues  from the
                    Agreement Field all Royalties,  all other Fiscal Obligations
                    which the  Contractor is subject to in accordance  with this
                    Agreement, contributions to the reserve fund, and all direct
                    and  indirect  costs  reasonably  necessary  for  conduct of
                    Contractor's business.

                                       26

<PAGE>


         9.5.2.  Auditing  of the  Contractor's  financial  activities  shall be
         conducted by the related  authorized State Organ. In case it is needed,
         Contractor may invite any Organization as Auditor.

         9.5.3.  Status  of  the  accounting  records,  correct  filing  of  the
         financial  results,  effectuation  of the  payment  transferred  to the
         budget shall be made  completely  and on time, and other issues related
         with the  taxation  shall be  followed  by the State Tax  Office of the
         Republic of Kazakhstan.

                                  SECTION - 10

                       PROTECTION OF SUBSURFACE RESOURCES,
                          NATURAL ENVIRONMENT AND LABOR
                              AND POPULATION SAFETY

Field research,  exploration and  development  activities  shall be conducted in
accordance  with the laws and  regulations of the Republic of  Kazakhstan,  with
technical  principles,  and the  principles for the protection of job safety and
natural  environment  and finally in  accordance  with the  precautions  for the
protection of all subsurface, earth, hydraulic resources, atmosphere, zoological
and vegetal life,  historical and cultural properties,  and with the precautions
for security and health  protection in the  Agreement  field.  Contractor  shall
conduct the following  activities during the design and construction  studies of
the auxiliary buildings:

     .    Using advanced local and international techniques and technologies for
          the  purpose  of  preventing  any  waste  and to  obtain  the  maximum
          production in order to obtain the maximum benefit.

     .    To minimize the harmful  effects given to the natural  environment and
          to prevent the  destruction and  uninhabitance  of the lands including
          technical and biological recultivation.

     .    To protect subsurface and earth hydraulic resources from pollution and
          loss.

     .    To  protect  air  from  every  type of  harmful  substances  including
          facilitated  (such as  heating  rooms,  deposed  petroleum  production
          points containing Hydrocar- bon, Gas and etc.) and unfacilitated (such
          as diesel units of the drainage equipment,  vehicles,  tractors, etc.)
          pollution resources.

     .    To protect the zoological and vegetal life and historical and cultural
          properties covered by the RED BOOK of the Republic of Kazakhstan.

                                       27

<PAGE>


     .    To provide  safe and  healthy  working  conditions,  to  organize  the
          control of job safety  status and to convey the  information  on these
          issues to the employees on time.

During the implementation of the Petroleum  Activities,  continuous official and
industrial  ecological  control  for  the  protection  of  natural  environment,
ecological monitoring shall be supplied in the Agreement Field. During the trial
production  project  stage,   ecological   investigations  of  the  wells,  well
surroundings in the Agreement Field shall be made and the areas needs to be paid
exclusive attention shall be determined.  In addition,  possibility of potential
accident  cases  shall be  analyzed  and plans  containing  these  studies to be
applied and the  programs  for the  normalization  of the region for  ecological
purposes shall be prepared.

Funds  allocated  for the  Contractor's  activities  to inspect  and analyze the
ecological status of the lands, to organize and realize  environment  protection
activities shall be deposited in the account of nature protection payments.

                                  SECTION - 11

                               OTHER LEGAL ISSUES

11.1.    Transfer and Assignment of the Rights

         11.1.1. Contractor may transfer and/or assign its rights,  liabilities,
         obligations or shares related with the Agreement wholly or partially to
         the third parties.

         11.1.2.  In case of any transfer and/or assignment of rights partially,
         the  Contractor  shall be jointly and  severally  liable along with the
         assignee in connection with the Agreement.

11.2.    Payment Related with Field Allocation and Usage Right

In case of an allocation of a land belonging to any other real and/or  juridical
body for the  realization  of the Petroleum  Activities,  Contractor  shall make
payment to the  landlord or to the person who  possesses  the usage right on the
land,  since  the  usage  of  such  land is  limited  because  of the  Petroleum
Activities.

11.3.    Insurance

Contractor is obliged to insure its assets in compliance with the legislation of
the  Republic  of  Kazakhstan  and  in  accordance  with  the  recognized  world
standards, norms and customer practices.

                                       28

<PAGE>


11.4.    Legal Adjustments In Relation With Working Conditions

Employment,  redundancy,  resignation,  salary,  work and leave  status,  social
indemnity  and social  security of the  citizens of the  Republic of  Kazakhstan
employed  by  the  Contractor  shall  be  dealt  with  in  accordance  with  the
legislation  and  communiques  in force in the Republic of  Kazakhstan  and with
recognized  world  norms  and  standards.  Unless  otherwise  indicated  by  the
international  treaty signed  between the Republic of Kazakhstan and the country
of  the  foreign  subcontractor,  for  the  foreign  personnel  employed  by the
Contractor; laws and regulations of the Republic of Kazakhstan is applicable.

11.5.    Force-Majeure

         11.5.1.  In case one of the Parties do not fulfill its  obligations due
         to any Force-Majeure condition,  then such Party shall notify the other
         Party in written form about the commencement date of such Force-Majeure
         condition within a reasonable time period.

         11.5.2.  Within the defined time period,  the  obligations of the Party
         directly  effected by loss shall be frozen  during the existence of the
         Force-Majeure conditions.

         11.5.3. Term of the Agreement,  shall be extended automatically as long
         as the Force-Majeure case lasts in equal time period including the time
         for the repair of equipment and technology.

         11.5.4. Force-Majeure conditions  are not accepted as valid excuses for
         the  Parties  not   to  fulfill   their   financial   liabilities   and
         obligations.

11.6.    Local Consumption

         11.6.1.  In case of a declaration  of an  extra-ordinary  status by the
         Government  and/or a  decision  that the  Petroleum  need in the  local
         market is not met during the term of the  Agreement,  then,  Authorized
         Body can demand the HC share of the  Contractor  for the local  market.
         Such demand  shall be notified to the  Contractor  in written  form 100
         (hundred)  days  before and a separate  agreement  shall be executed in
         that respect.

         11.6.2.  Maximum  amount of HC given by the Contractor to meet with the
         requirement of the local market in accordance with Clause 11.6.1 herein
         above  shall be equal to the  shortage  in the local  market and to the
         shares given by other  contractors  equipped with production  rights by
         the Republic of Kazakhstan.

         11.6.3.  In  case the  Contractor  delivers its own share in accordance
         with Clause 11.6.1  herein above to meet with the  requirements  of the
         local market,  the  payment to be made to the Contractor,  shall not be
         less than the prices  agreed  between the Contractor and the buyers and
         shall also include the  penalty and the  termination fee payable by the
         Contractor  for its failure  in meeting its  commitments as a practical
         result of the Clause 11.6.

                                       29

<PAGE>


         11.6.4.  When Contractor  markets its own HC share in the world market,
         then  Authorized Body shall not intercept to such HC share to meet with
         the  requirements  of the  local  market.  However,  in  case  of  such
         interception,  Authorized Body shall pay to the Contractor on the basis
         of world  market  prices in foreign  currency  for its HC share and the
         penalty  and  termination  fee  Contractor  shall be liable to pay as a
         result of its failure in meeting with its commitments to the buyers.

         11.6.5.  In case the payment for the delivery made by the Contractor in
         accordance with Clause 11.6 herein above is not  effectuated  within 30
         (thirty) days commencing from the date of loading, then Contractor,  as
         being  compliant to this  Agreement,  shall have the right of receiving
         back and market the Crude Oil to be delivered to the Authorized Body in
         the amount which enables the Contractor to fulfill its  commitments and
         liabilities.

11.7.    Amendments to the Terms and Conditions of the Agreement

         11.7.1.  All terms and  conditions  stated in the Agreement can only be
         amended  with  the  mutual  agreement  of the  Parties.  In  case of an
         amendment to this  Agreement,  it shall be effective with the execution
         of a written protocol or an agreement.

         11.7.2.   Clause  3.4  herein  above  shall  be   applicable   for  the
         termination of this Agreement.

11.8     Confidentiality

         11.8.1.  Except  the  conditions  stated  herein  below,  any  type  of
         information  obtained and/or  purchased by the Parties related with the
         Agreement and needed for the fulfillment of the terms and conditions of
         the Agreement shall be kept confidential.

         11.8.2. As  an exception to the rule referred in clause 11.8.1.  herein
         above,  the  Parties  can  use  every   type  of  information  for  the
         preparation of the reports and documentation required by law.

         11.8.3.  Parties,  jointly  or  severally  can  publish  every  type of
         scientific  and  geological  information  related or unrelated with the
         Agreement  Field but directly  related with the  Petroleum  Activities,
         provided that such information  shall not create any negative effect on
         the Petroleum Activities.

                                       30

<PAGE>


         11.8.4. Contractor can not disclose any information obtained out of the
         Agreement to the third parties  without the  permission of the Board of
         Directors.  In  the  following  cases,  Contractor  can  disclose  such
         information and data:

               a)   to  judicial  organ  according  to the laws and  regulations
                    applicable to the Contractor,

               b)   to any financial  organ and/or  authority,  its own branches
                    and technical  consultants and to the potential  assignee of
                    the Agreement for the purpose of enabling the  Contractor to
                    fulfill its commitments  and obligations  arising out of the
                    Agreement,

               c)   to the  Sub-Contractors  and to the  third  parties  for the
                    implementation of the Petroleum Activities, and

               d)   in the cases of exchange of information.

         11.8.5.  The terms and conditions  referred in Clause 11.8 herein above
         shall be in force and effect after the  termination  of the Contract as
         well.

11.9.    Settlement of Disputes

In case of any disagreement  involving this Agreement and License that cannot be
settled, such disagreement shall be resolved by an arbitration to be established
on the basis of the  arbitral  rules of the  International  Chamber of  Commerce
(ICC) at Zurich,  Switzerland.  Any procedural  issues not determined under such
arbitral rules shall be determined in accordance  with the laws and  legislation
of Switzerland,  other than any such law which would refer the matter to another
jurisdiction.  The governing law for the  interpretation of this Agreement shall
be the law of Switzerland,  and the  arbitration  should be conducted in English
language.  The  decision  of the  arbitration  shall be final and  binding.  The
English  version of this Agreement shall control in the event of any discrepancy
between the English version and any other language version. This Agreement shall
control in the event of any discrepancy between this Agreement and the Articles.
Investor is a third party beneficiary of this Agreement and Contractor agrees to
act on behalf of Investor in regard to any dispute  Investor may have  regarding
the implementation of this Agreement.

11.10.   Waiver

To be  effective,  any waiver  must be in writing  and signed by the Party to be
charged.


                                       31

<PAGE>

11.11.   Correspondences

         11.11.1.  Any type of  communication,  demand,  request etc.  delivered
         and/or transmitted via courier, post, telegraph,  telex or facsimile in
         written form  appropriate for the terms and conditions of the Agreement
         to the below mentioned address shall be deemed to be delivered.

                  a)  Authorized Body

                  480091; Almaty
                  Bogenbay Batyra Str.142

                  Ministry of Oil and Gas Industries

                  Phone: 3272 - 62 60 80
                  Fax  : 8 3272 - 69405
                  Telex: 251238 KURS SU

                  b)  Contractor

                  426200 Aktau
                  4 Mikrorayan Building No. 10 Block A

                  Phone:  51 46 62
                  Fax  :  8 37922 514639

         11.11.2. Any  Party  may  change its address by a written notice to the
         other Party.

11.12.   Headings

The headings of the Clauses used in this  Agreement  are only for the purpose of
the references and will not effect the interpretation of the provisions.

This Agreement is prepared and executed in 3 (three) copies each both in English
and Russian language with the same power and effect.

AUTHORIZED BODY                              CONTRACTOR
Republic of Kazakhstan                       Karakuduk-Munay Inc.
Ministry of Oil and Gas
Industry

------------------------------               ----------------------------------
N.U.Balgim                                   U.B.Hairoy

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